Comcast announced Monday it will spin off its media operations into a separate publicly traded company, sending its stock surging more than 20 percent as investors responded to the news.
According to CNBC, the separation will be structured as a tax-free spinoff of NBCUniversal and Sky. Comcast shareholders will receive shares in both companies when the deal closes, which the company expects to happen in about a year.
The new NBCUniversal company will include Universal theme parks, Universal film and television studios, the NBC and Telemundo broadcast networks, the Peacock streaming service, the Bravo cable network, and the European media business Sky. The remaining Comcast will focus on cable, wireless, and business services.
Comcast co-CEO Mike Cavanagh will become CEO of NBCUniversal. Michael Angelakis, the company's former chief financial officer, will become CEO of Comcast. Brian Roberts, who currently serves as co-CEO and chair, will remain involved in the leadership of both companies.
"As we look ahead, it has become clear that our technology and media businesses each have compelling opportunities in front of them that are distinct in nature and best pursued with dedicated focus, strategic flexibility, and tailored investment priorities," Roberts said on a call with investors Monday. "That is why today we announced an important next step in Comcast's evolution. Our plan to create two separate companies, Comcast and NBCUniversal."
Cavanagh pointed to the broader pressure facing the industry. "There's no surprise that both the media and telecom landscapes have become increasingly competitive and that pace of change continues to accelerate. We simply don't see these conditions changing anytime soon," he said.
Comcast shares had climbed as much as 26 percent in premarket trading before settling to about 23 percent higher. The stock had fallen roughly 30 percent over the prior 12 months as the shift away from traditional television bundles and toward streaming weighed on the company's valuation.
The split follows an earlier move by Comcast to separate its portfolio of cable TV networks and digital assets, including CNBC, into a separate public company called Versant Media. That deal was completed earlier this year.
The media sector has seen significant consolidation recently. Paramount Skydance completed its merger last year. Earlier this month, the Department of Justice approved a $110 billion deal combining Paramount Skydance with Warner Bros. Discovery. Fox also entered an agreement to acquire Roku for $22 billion earlier this month.
During the spinoff process, Comcast said it will pause share repurchases. The company said it will provide more details on the dividend policy for each company at a later date.
